GAO: FCC needs to improve oversight

While the Federal Communications Commission is already putting the wireless industry under the microscope, the U.S. General Accountability Office (GAO) says the FCC needs to improve its oversight of wireless phone service.

“In this fiercely competitive industry, our members work very hard for each customer to provide them with the best products and services,” CTIA President and CEO Steve Largent said.

The GAO estimates 86 percent to 89 percent of wireless phone users are satisfied with their coverage when using their phones at home, work or in a vehicle. But the GAO estimates that 19 percent of wireless users wanted to switch carriers during the survey period – in 2008 and early 2009 – but did not do so. About 42 percent of the users didn’t switch because of early termination fees (ETFs), which are increasingly coming under government scrutiny.

Last week, the FCC sent a letter to Verizon Wireless seeking answers to its ETF policy changes and seeking rationale for increasing the fee for an “advanced device.” Verizon was given until close of business on Dec. 17 to respond.

In response to the GAO report, Chris Riley, policy counsel at the consumer rights group Free Press, said it confirms that carriers are using inflated early termination fees to lock millions into long-term contracts. “Consumers are being forced to pay huge fees that the phone companies just can't justify. Public interest groups, consumers, Congress, and now the GAO have all expressed concern with these fees,” he said. “The FCC must act and put a stop to this anti-consumer practice that threatens innovation and competition in the mobile marketplace.”

Last month, reports surfaced that Verizon Wireless was doubling its ETF from $175 to $350 for pricier advanced devices, prompting Sen. Amy Klobuchar (D-Minn.) to introduce the Cell Phone Early Termination Fee, Transparency and Fairness Act.

Largent said CTIA understands there may be some confusion over early termination fees. “There are many choices available for consumers,” he said, including options that do not have any ETF, such as unsubsidized handsets without a contract and a prepaid plan that has no contract – options that 20 percent of American wireless consumers now choose.

The 71-page GAO report also encourages more interaction between the FCC and state agencies. State commissions surveyed indicated that communication with the FCC about wireless phone service oversight is infrequent. As such, the “FCC is missing opportunities to partner with state agencies in providing effective oversight and to share information on wireless phone service consumer concerns,” the report says.

According to the GAO survey, most wireless consumers with problems would not complain to the FCC, and many don’t know where they could take their complaints.

“Lacking in-depth analysis of its consumer complaints, FCC may not be aware of emerging trends in consumer problems, if specific rules are being violated, or if additional rules are needed to protect consumers,” the GAO says.

The FCC was given a chance to comment on the report, and it said the Commission has begun work to address many of the concerns raised in the report.

The GAO study was done at the request of Rep. Edward Markey (D-Mass.), a member of the House Energy and Commerce Subcommittee on Communications, Technology and the Internet and a longtime proponent of net neutrality.